Penn National, parent company of Grantville-based Hollywood Casino near Harrisburg, won the right to choose its second Pennsylvania Category 4 Casino location within the Keystone State Wednesday after submitting a near-minimum bid of $7,500,003 to the Pennsylvania Gaming Control Board.

West Cocalico Township in northern Lancaster County (pictured) was chosen as the latest mini casino center point. The municipality of roughly 8,000 residents is less than an hour’s drive due east of Pennsylvania’s capital, and is situated along Interstate 76 westbound from Philadelphia to Harrisburg.

With the bid, Penn National secures another defensive barrier to protect its main Hollywood property from potential market cannibalization. Meanwhile, the state has officially generated over $127 million in total mini casino license revenue so far this year.

Penn National’s first satellite location near Yoe (York County) was awarded on January 10th, when the land-based casino conglomerate submitted an astronomical bid of $50.1 million.

Penn National Bid Makes Mini Casino Map Clearer

Half of the 10 potential Pennsylvania mini casino license locations have now been reserved as of Wednesday, April 4th. Not surprisingly, all designated “center points” are within convenient driving distance of a major Pennsylvania city and/or another state’s border.

West Cocalico Township Penn National

Penn National – Yoe, York County – $50.1 million (January 10th)
Stadium Casino – Derry, Westmoreland County – $40.1 million (January 24th)
Mount Airy – New Castle, Lawrence County – $21.2 million (February 8th)
Parx Casino – South Newton, Cumberland County – $8.1 million (February 22nd)
Penn National – West Cocalico Township — $7.5 million (April 4th)

Waning Interest in PA Mini Casino Licenses

Wednesday’s “Subsequent Auction” failed to attract bids from existing Category 3 license holders Valley Forge and Lady Luck Nemacolin, who are now eligible to enter the blind-auction process.

With half of the licenses still up for grabs, the PGCB will soon determine which Qualified Entities will be able to participate in “Additional Auctions” (assuming there are zero bidders in the next scheduled “Subsequent” bidding process later this month).

This could result in several gambling interests outside of the Keystone State gaining access to the Pennsylvania land-based market through a satellite casino location, which can house as many as 750 slot machine terminals and 30 table games during its first year of existence.

Attention Shifts to Pennsylvania Online Lottery and iGaming

Although the ongoing “Subsequent Auction” process is big news for the Keystone State gambling industry, the Board’s attention is now honing-in on the anticipated launch of its state-sponsored online lottery along with real money iGaming options — which include online poker.

The PGCB hast posted temporary regulations that allow each iGaming main certificate holder to utilize an unlimited amount of skins to offer real money online poker and casino games in Pennsylvania.

Content submitted by various iGaming analysts and researchers suggests that restricting the number of iGaming skins in Pennsylvania would have had a significant negative impact on internet casinos’ ability to generate revenue, although Penn National and Greenwood Gaming subsidiary Parx Casino were both in favor of such limitations.

The Board has also determined that all skin-related branding for iGaming operators in the Keystone State must correspond to the name of the existing main certificate holder, which could limit the amount of marketing exposure that operators such as Betfair, WSOP, 888, Party, and PokerStars receive in the state.

Land-Based Casino Market Saturation in Northeastern United States?

Friction between the New York state government and existing land-based casinos signals a potential market saturation concern in the northeastern United States, where widespread gambling expansions have resulted in the proliferation of convenient locations for consumers.

As PlayUSA columnist Martin Derbyshire reports, two commercial casinos in upstate New York (Del Lago Tyre and Rivers Schenectady) have recently requested a financial bailout from statewide lawmakers.

Pennsylvania’s massive taxation of slot machine revenue, redistribution of land-based market share, restrictive governance, and all-encompassing licensing requirements strongly suggest that the Keystone State could be setting itself up for a similar scenario in which some gambling properties will experience financial difficulties going forward.

This could lead to a situation in which commercial casinos ultimately find themselves in competition with state-controlled gambling interests if legislators decide to use public funding to bail out under-performing gambling businesses.

Gambling Operators Underestimate Consumer Intelligence?

Despite saturation concerns, those who wish to build more casinos in the northeastern U.S. continue to lobby for more locations — particularly in the northern New Jersey region — which could benefit greatly if the United States Supreme Court overturns PASPA sports betting prohibitions in its upcoming ruling.

And while such locations could be financially feasible depending on which regulatory measures are put into place, the need for most northeastern United States casinos to increase customer spend figures presents a unique challenge in an informed-consumer environment.

Recreational and new gamblers are becoming more aware of casino game house edges and seeking out publicly-available information before deciding which establishments to patronize, which could spell doom for a large portion of existing land-based casinos that are in the process of raising prices to meet revenue goals.

Legalized sports betting opportunities (pending SCOTUS ruling) could open up statewide gambling markets to more consumers and bring real money wagering more into a mainstream focus, but it remains unclear whether gamblers will eventually be turned off by less-than-favorable RTP (Return to Player) rates that would be necessary under certain regulatory and taxation mandates.

For now, Pennsylvania has a fifth satellite casino location, a judgement regarding iGaming skins, and will be accepting applications for online gambling licenses later this month. We will continue to keep our readers up-to-date on the latest Pennsylvania gambling news as events occur here at Part Time Poker.

Read More Pennsylvania Gambling News from David Huber

Pennsylvania Gambling Industry News & Analysis (Feb 21, 2018)
Pennsylvania Live Poker Revenue Numbers Are Cause for Concern (Jan 28, 2018)
Pennsylvania Regulators Extract Maximum Value for Satellite Casino Licenses (Jan 25, 2018)

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